USA pipeline update – Part 1

2016 has been a challenging year for the global pipeline industry, including the US. This piece will provide a brief overview of key pipeline projects in the US, including Dakota Access, Keystone XL, Atlantic Coast, PennEast, Sabal Trail, Colonial pipeline, and more.

PennEast pipeline

The US$1 billion, 36 in. dia. PennEast pipeline project was designed to transport natural gas from Pennsylvania's Marcellus Shale fields to markets in Pennsylvania, New Jersey and beyond.

A key and repeated occurrence on the PennEast pipeline is route adaptation. In January 2015, PennEast officials said that they had altered the pipeline's original route from August 2014. Furthermore, in September 2016, PennEast filed 33 minor route modifications to the pipeline with the Federal Energy Regulatory Commission (FERC). News sources reported that the changes come as a response to the pipeline company’s ongoing efforts to reduce the effects of the pipeline on endangered species (specifically, the bog turtle and long-tailed salamander), wetlands and landowners.

Peter Terranova, Chair of the PennEast board of managers stated: "The route changes […] reflect the constructive feedback received from landowners, agencies and other stakeholders and demonstrate PennEast's commitment to incorporating their input where safely and logistically feasible.”

The pipeline faced a significant amount of opposition, with several hundred citizens, affected homeowners and elected officials coming out to oppose the proposed PennEast pipeline at six 'public meetings' hosted by the FERC this year.

On 12 September, the New Jersey Division of Rate Counsel – which represents ratepayers' interests – submitted a strong case against the supposed market need for the PennEast pipeline. The comment stated that the ratepayer advocate agency "is concerned that the DEIS does not address that the 'need' for the project appears to be driven more by the search for higher returns on investment than any actual deficiency in gas supply or pipeline capacity to transport it."

The report concluded that "the terms under which the project has been proposed are unduly generous to PennEast and unfair to consumers" and that "the pursuit of rich financial incentives does not constitute a showing of 'need,' and is insufficient to justify the project."

Amid the growing opposition from residents and key government agencies, the FERC has announced a second delay in its schedule for reviewing the proposed PennEast pipeline.

The date for issuance of the final environmental impact statement was postponed to 17 February 2017, from 16 December 2016, as acknowledged by the New Jersey Conservation Foundation.

The delay will give PennEast time to submit additional information regarding the 33 route modifications that were announced in September.

The FERC sent the company a request for 46 sets of new data and demanded 34 corrections to PennEast's application to build the pipeline. In several cases, the FERC notes that PennEast's maps are outdated, incorrect, and incomplete. In a letter dated 4 November, FERC told PennEast it must comply with the request within 20 days.

It added a new 30 day public comment period for its Draft Environmental Impact Study (DEIS) on PennEast due to the route changes proposed by PennEast after the close of the DEIS comment period.

Keystone XL pipeline

In 2015, the US Department of State decided not to issue a Presidential Permit to construct and operate the US section of the Keystone XL pipeline. In response, in January 2016, TransCanada took legal action against the US under the North American Free Trade Agreement (NAFTA).

While rejected by President Obama, the 1197 mile, US$8 billion pipeline project could be revived by the newly elected Donald Trump. During his election campaign, Trump suggested that he would approve Keystone XL, so long as the US receives a percentage of the profits.

In light of Trump’s victory, an optimistic TransCanada stated that it was currently “evaluating ways to convince the new administration on the benefits, the jobs and the tax revenues this project brings to the table […] TransCanada remains fully committed to building Keystone XL.”

Dakota Access pipeline

Amidst extensive protest across the world, the US Army Corps of Engineers has recently denied Energy Transfer Partners a key permit for construction of the final section of the Dakota Access pipeline.

The Standing Rock Sioux Tribe began protesting against the Dakota Access pipeline in April. The tribe and their thousands of supporters endeavor to stop the construction of the pipeline by arguing that the line would threaten their water supply and would impact their cultural and historical heritage.

The protests have continued through spring, summer, fall and winter. While stopping the pipeline’s construction is the long-term goal of the group, the short-term goal is dealing with the winter.

A more extensive roundup of the Dakota Access pipeline project can be accessed here.

Sabal Trail pipeline

At the beginning of February, Sabal Trail Transmission, LLC – a joint venture of Spectra Energy Partners, LP., NextEra Energy, Inc. and Duke Energy – received a certificate of public convenience and necessity from the FERC to construct and operate the Sabal Trail interstate natural gas pipeline project. Subject to certain conditions, this authorised Sabal Trail to commence the final preparations for the construction of the pipeline.

Once complete, the 516 mile pipeline would be able to deliver approximately 1.1 billion ft3/d of natural gas to the southeast of the US. It is expected to diversify the region's energy sources and generate economic benefits for local communities.

However, not everyone is agreement about this. In early December, several protestors gathered outside the Dunnellon residence of Kathy Lane – a newly established activist, who will be affected by the Sabal Trail project.

Protesters are concerned that the project will damage private property, harm Florida’s springs, pollute water and introduce a risk of leaks and explosions. After sharing her concerns on Facebook, protestors travelled from over Florida to show their support for Lane.

The 500 mile long pipeline is currently under construction in east Alabama. It will take natural gas through Georgia to Florida.